Stephen Beer, Blog, Stephen Beer

Stephen Beer (www.stephenbeer.com)

Monday, October 06, 2008

Thinking ahead amidst the financial crisis

The global financial crisis continues, with FTSE down almost 8% today. But what about the potential unfolding economic crisis? Governments and central banks are rightly concerned about the immediate problems, but it is worth thinking more about the months ahead.

Here are some things we can say with some confidence at this point:

companies are finding it difficult or impossible to borrow from banks

future investment is in jeopardy

unemployment will rise (we just don't know how much or for how long)

consumer and bank borrowing will unwind and government deficits will grow

Here is where policy-makers need to be doing some serious thinking (while avoiding undue pessimism):

update unemployment policies, including information about what to do if you lose your job

realise that for many unemployment will probably be a new experience in their careers - how can coping with unemployment and finding work be as straightforward for everyone as possible?

with government borrowing set to rise, how can this take place within a new framework?

work out how new jobs can be created in the months to come

ensure the poorest in society are not left behind as government spending becomes constrained